5 Big Tech Bets For Indian Banking

Until a few years ago, it was a common sight in India to see the bank customers stand in a queue either with a withdrawal slip in their hand or to get their passbook updated. The last 2-3 years has seen the banks coming up with the ‘anywhere banking’ concept that offers banking service at your doorsteps. The coming years will be even more decisive for the Indian banks that will embrace technologies from mobility, apps and social to cloud and big data to optimize operations and refresh their business models to make it more customer-centric, says a new study by IT services major Infosys.

This would imply that banking trends in India will go beyond ‘anywhere banking’ to ‘everywhere banking.’ “The new trend can help banks find ways to improve profitability and return on equity, meet customer expectations of personalization and better service and to digitize to stay alive,” pointed out Rajashekhara V Maiya, Infosys AVP and lead product manager Finacle product strategy.

Here are the five most disruptive technologies for the Indian banking sector.

Mobile: A game changer

Analysts believe mobile can be a game changer for the banking industry in the coming years.“If one has to enable financial inclusion in India, it has to be done through the mobile and not by opening more branches. It is cheaper for everyone, for regulators, customers and of course, banks. The question that strategy teams in banks should be asking is, do we have a better chance of growth, inclusive growth by distributing a million mobile phones than we would by starting 10,000 branches,” said Brett King, the world’s most renowned banking guru at a recent conference organized by CXOtoday and Oracle in India.

He believes that countries like Kenya, Indonesia and Philippines have proven that one does not need more bank branches for financial inclusion, but have to move on to the mobile. The Infosys report too mentioned that mobile mobile banking will see a rapid increase in the coming years. To read the full conversation with Brett KingClick here

Betting on Big Data

The Infosys study also observes that data use in the coming days will be more analytical in nature. “Instead of the hype-tech of big data, the focus will be more on the business outcomes it can deliver,” said Maiya. He believes that the core banking data will now be effectively used to provide banking solutions to better understand and serve the customer.

However, King believesbanks must also find ways to leverage customer information by relying on certain small but useful data points. For example, every time the customer swipes a debit card, if you can give him information about his account balance, how much money was spent on a certain product, weekly status or other such details, it might actually act as useful advice for him. Banks can also use these opportunities to make targeted offers to customers.

Banks were earlier not much upbeat on social media. However, in the past one year or so, they are using social media such as Facebook, Twitter and YouTube to connect with the consumers, while at the same time, making them aware of their promotional offers and other activities. Infosys believes in the next one year, Indian banks will use social media platform for more inclusive purposes rather than having a Facebook page or a Twitter handle sending out press releases. The study forecasts a possibility of financial transactions through social platforms. In other words, it says that banks may soon start using social media for loan recovery and to get a better credit rating overall.

Not only bigger banks, small corporate banks across the country are also witnessing gain in engaging customers through social platforms. According to Crijos Baretto, CEO, Bassein Catholic Bank, a Mumbai-based cooperative bank, social media can be ideal for smaller cooperative banks that cannot afford to spend a great deal on product promotion and marketing. He explains that before using social media platforms, very few young generation customers visited the bank. “We have started to expand our presence in the social space and acquired a flurry of customers between ages 20 and 30 years, who are active on social media sites,” he says.

Cloud is no longer an option for banking institutions today as in the very near future banks, big or mid-sized, will have to adopt the technology, whether for core-banking purposes or for allied services, says the Infosys study.

“Banks are increasingly relying on the power of the cloud to achieve their objectives and manage current market challenges. The shifts are occurring in phases, sometimes in parallel, through distinct adoption curves in process and complexity,” says Arindam Mukherjee, Vice-President - Sales (BFSI), Cisco India and SAARC, in his blog.

According to him, there will be three ‘waves’ of cloud adoption by Indian banks. Firstly more banks will move their non-core operations to the cloud which is already happening. In the second phase, banks will be more willing to incorporate single-tenant cloud solutions into their core banking activities and finally, Cloud-enabled digital wallets carrying a range of different services on smartphones is another high-potential area, although this will require agreements with various telcos over customer ownership.

Maiya too points out that surround solutions will be experimented before core-banking moves into cloud completely.

Wearable tech, a reality

This will be one emerging area to look at. Although it will take a while for wearables to make a mark in the Indian banking system, Infosys researchers believe its foundations has been laid in the last one year with the emergence of Google Glass. By 2017, researchers predict this technology to become a part of the Indian banking system as wearable banking may enable a customer to shop through the device without the physical ‘touch’.

The Infosys study also states that banks can improve profits by up to 20% by reducing complexity. With more customers, regulators and bankers demanding simplification in banking, in the next one year, banks that adopt a simplicity model may emerge more cost competitive, customer centric and innovative than the rest.

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